Podcast #32 - Our wildest stock pick so far! Nano-X Imaging

This week we take a deep-dive into another potential hypergrowth stock-pick, Nano-X. This was a fun episode to record, and we both changed our minds twice about whether it was a smart buy or just tantamount to setting our money on fire during the episode research!

Nano-X Imaging promises to make medical imaging more accessible and more affordable for everyone. They have developed a new type of X-ray technology that is smaller, lighter and less expensive to manufacture and operate, and an innovative pay-per-scan business model. However, with no earnings, no sales, and as yet no regulatory approval, is this revolutionary technology too good to be true?

Two-thirds of the world’s population does not have easy access to medical imaging. With its new energy-efficient X-ray technology and innovative pay-per-scan business model, Nano-X is hoping to make this potentially life-saving service available to urgent care centres, outpatient clinics and rural areas all over the globe
Using a semiconductor-based digital X-ray source, Nano-X has developed an X-ray tube that is less expensive to manufacture, smaller, lighter, and able to work at room temperatures, removing the need for large and expensive cooling components. The Nanox.ARC is a medical imaging device using their new X-ray technology and is estimated to cost $10K-15K, compared to $1M-3M for traditional X-ray machines
They are innovating with an MSaaS (medical screening as a service) business model, where machines are provided for free or at low cost, and revenue is received per scan. Scans are estimated to cost $40 each on average (compared to $300 for a traditional X-ray), of which Nano-X receives $14 and the remainder is kept by the service provider. Contracts with minimum scan volumes result in a reliable recurring revenue stream
Nano-X has contracts to deliver 5,150 Nanox.ARC systems with 9 service providers in 13 countries, and agreements (no obligation) with USARAD and SK Telecom to deliver a further 3,000 and 2,500 units respectively. They aim to deliver 1,000 units in the first quarter of 2022, and a total of 15,000 units by 2024, which would result in a minimum annual revenue of $400M
The Nanox.ARC machines will be connected to the Nanox.CLOUD, an online service that allows scans to be shared with specialists across the world in near realtime. This is standard practice in many developed countries, but this may be extremely beneficial for regions that do not have this capability and do not have local radiologists
A 510(k) application for a single-source imaging device was submitted to the FDA in January of 2020 and a decision is expected soon. A 501(k) clearance allows a device to be marketed as safe and effective and is equivalent to an existing legally marketed device. Even with FDA clearance, there are many challenges to overcome to bring the product to market
Nano-X demonstrated the technology in a live stream at the Radiological Society of North America (RSNA) meeting in Nov 2020. However, there remains debate over whether or not the technology is real. Will Nano-X disrupt the global medical imaging industry or go down in flames as the next Theranos?